Elon Musk spent a fortune on the doomed GOP midterms, but his losses are still piling up days later as SpaceX and Tesla shares tank.

The rout in both Tesla and SpaceX continued for a second day on Thursday, with both stocks tumbling in the aftermath of the blue wave that swept the Democrats back into power in Congress and across the US.

By Thursday's closing bell, Tesla had dropped 14% in two days, while SpaceX lost about 13%.

Thoughts that Democrats might be bullish for EVs, and therefore Tesla, were quickly overshadowed by other concerns about what the election outcome could mean for Musk's business empire.

Thoughts have quickly turned to the fate of potential SpaceX-Tesla merger, a prospect that's been a major bull catalyst for investors this year.

"I think that this merger is now at risk, and I think that it will be hard to complete with so much volatility and with high interest rates and and the lack of investment," Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management told Business Insider.

Democrats could place much greater regulatory scrutiny on any merger talks, or even force Musk himself to come before Congress in light of reports that he recently throttled Starlink service to Ukraine amid its war with Russia.

Gerber, a former Tesla bull, has emerged as an outspoken Musk critic, though he maintains a more bullish stance on SpaceX, a company his firm holds a position in through a previous stake in X.

He added that for Musk, who shifted his firms' headquarters to Texas, the outlook now appears much more fraught as the state ushers in a Democratic governor.

Business Insider has Games! Want more Business Insider in your news feed? Add BI in Google so our reporting is easier to find when you’re searching for what matters. Add to Preferred Sources

Gordon Johnson, CEO of market research firm GLJ Research agreed that Tesla-SpaceX merger could be in jeopardy following the midterms.

"The problem is timing and scrutiny," he stated. "The plan was to announce in the first half of 2027 and close while Trump is still in office. Now any merger vote plays out while Democrats hold subpoena power over the Starshield/Ukraine throttling, DOGE, and SpaceX's related-party financing."

SpaceX stock is also being caught in the frenzied selling that has hammered data center operators and AI infrastructure names on Thursday. The iShares Semiconductor ETF was heading for its worst day since 2020, and the Nasdaq 100 dropped 6% into a formal correction during the session.

The fear is that Democrats could tighten oversight and regulation of data centers. For SpaceX, this would be a blow, as the company's AI ambitions are a major part of its growth thesis. Meanwhile, the blue wave swept states that are at the epicenter of the AI data center boom, particularly Texas and Georgia. Texas alone is expected to account for up to 30% of data center development through 2030.